Energy Efficiency

Throw a frog into boiling water, the story goes, and it will jump out. But if it is placed in cold water that is slowly heated it will not perceive the danger and will be boiled to death.

This is just what is happening to the draft Energy Efficiency Directive. Each successive amendment from the European Council weakens the text a little more. Now the Council’s version – a compilation of the most unambitious points from each member state – has almost reached junk status.

Already last year – before the directive’s release in June 2011 – the Council had pressured the Commission into proposing a number of loosely-linked binding measures instead of a binding overall 20% target (which Commission analysis shows would have been the best option).

Since then the Council has been steadily watering down all the main measures in the directive – especially the 3% renovation rate for public buildings and the measure with the highest savings potential: the 1.5% annual savings target.

Council amendments started by specifying that the 3% renovation rate for public buildings should initially only apply to surface areas over 500m2. This excludes, for example, most social housing in the UK. So those most in need of better insulated and cheaper-to-run homes would be left out.

Some weeks later the Council proposed that only ‘Central Government Authorities’ should be covered by the 3% target. In Germany this narrows the scope of the target to around 30 buildings.

Meanwhile, the Council is squeezing the 1.5% annual savings target from all sides. First, by reducing its scope: the 1.5% target covers final energy – the energy used by businesses and consumers after it has been transformed into electricity, or refined into petrol or diesel. The Commission had already excluded the transport sector (the European Parliament, rightly, wants it back in). But now the Council wants to exempt 40% of the industries covered by the EU Emissions Trading System. If allowed, this means only half of the EU’s final energy use would be covered by the 1.5% target.

Second, the Council wishes to revise the 1.5% target downwards. Its latest amendments call for a gradual phase in of “1.0% in 2014 and 2015, 1.25% in 2016 and 2017 and 1.5% in 2018, 2019 and 2020”. This would reduce projected savings over the 2014-2020 period by about 14-15%.

Then there is the quality of the savings. The Council – led by Austria – is pushing for ‘early actions’ to allow member states to credit savings made before the introduction of the directive. Picture the reactions if a government sought to correct a budget deficit by statistically transferring the effects of previous economic measures. Yet this is standard Council practice for energy savings. Based on past experience with the 2006 Energy Services Directive this could slash the 1.5% target to around 1%.

Some member states also wish to credit ‘future actions’. This would allow savings to be credited before they have actually been delivered – meaning that each year’s 1.5% target would actually be delivered over a 5-25 year timeframe. Real annual savings would be just a fraction of the claimed savings.

Finally, there is the strong Council pressure to allow member states to “fulfil up to 20% of the [1.5% target] through energy savings achieved in the energy transformation sector” (i.e. power plants). This is bad for two reasons. The first is that the 1.5% target is intended to reduce energy consumption by businesses and consumers, not to make energy production more efficient. That was the task of other measures in the directive (which have also been watered down).

The second reason is more serious. If this amendment goes through, member states could meet the 20% contribution simply by fulfilling their 2020 renewable energy target obligations. Producing electricity from wind and solar energy is far more efficient than fossil fuel and nuclear generation (there are no thermal conversion losses from wind and solar). But the benefits of switching to renewables are already factored into estimates of the EU’s likely energy savings by 2020. These estimates – which the Council agrees with – show existing legislation is not enough to meet the EU’s 20% by 2020 energy savings target. There is a gap, which the Energy Efficiency Directive must close. It will not do so by counting savings that will happen anyway.

So the frog is slowly being boiled. But the good news is that the boiling frog anecdote is not actually true – frogs will jump out of the water, even when gradually heated. Will EU policymakers be similarly wise?

Alarm bells are starting to be heard. A recent paper from the Commission estimates that “the impact of the Council version would represent 38% of the expected impact of the Commission’s proposal”. And of course the Commission’s own proposal is not tough enough to close the savings gap and meet the 2020 savings target (only the European Parliament’s version would do so).

It is not too late to stop and think. Official negotiations with the European Parliament and Commission on the final text of the directive are still in their early stages. Governments repeatedly insist on the need to cut carbon emissions, save money, create jobs and reduce energy imports. A strong Energy Efficiency Directive is their best chance to do so.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

Guest post by Elena Gerebizza - Today concludes the Danish EU Presidency’s informal meeting of energy and environment ministers, where Commissioners for Environment Janez Potocnik, for Climate action Connie Hedegaard and for Energy Günther Oettinger gathered to discuss how best to orient the bloc’s environment and energy policies to ensure a ‘greener Europe to help solve the financial crisis’ . The meeting follows the publication in February of the EU’s Energy roadmap, in which the Commission outlined different scenarios to lead the energy transformation of Europe by 2050 . While the roadmap has elements that could lead to decarbonising the European economy and reducing the amount of fossil fuels within the EU’s energy mix, it would be remiss to suggest that it is the solution to set the EU on a green path towards economic recovery. The EU must address its overreliance on fossil fuels, and in particular those that are imported from abroad.

On 8 April climate change minister Greg Barker told the Financial Times “We are working patiently and quietly behind the scenes with EU partners to convince them of the strong economic as well as environmental reasons why we should go for 30 per cent [greenhouse gas emission cuts] rather than 20 per cent”.

Barker hopes to win his case in a meeting of EU environment ministers this Thursday (19 April) in Denmark. Good for him. But there is a catch. Barker’s Department of Energy and Climate Change is just as patiently and quietly working to weaken a proposal for tougher EU energy savings legislation. This proposal – the draft Energy Efficiency Directive – will also be debated in Denmark.

Leaked copies of official comments are clear proof of the UK’s opposition. It is rejecting proposals to make the EU’s 20% by 2020 energy savings target legally binding – despite experience with greenhouse gas and renewable targets showing such targets to be the most effective solution. It is blocking mandatory audits and follow-up energy efficiency improvements for businesses. And in a farcical spy games twist, the UK is also opposing widespread renovations for public buildings on the grounds of public security (see the full story from Reuters).

Analysis from the European Commission – which UK climate officials say they agree with – shows the EU needs to meet its 20% by 2020 energy savings target to achieve higher greenhouse gas cuts. The reason? Fossil fuels still account for 80% of the EU’s energy use. So using less energy is the most effective way to cut emissions.  At present rates, however, only 10% savings are expected; the draft Energy Efficiency Directive is supposed to close the gap.

So the UK is going to Denmark to lobby for a 30% greenhouse gas target while opposing the policy which can do most to cut emissions. Hardly a victory for joined-up thinking.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

 

We call it salami tactics: the EU Council is cutting away the Energy Efficiency Directive slice by slice. One tactic is to count savings made prior to the directive’s implementation (see our story on ‘early action’). Another is to credit savings before they have actually been achieved.

How this works: several member states are trying to set the 1.5% target in Article 6 so that each year’s required savings would actually be delivered over a 15-25 year timeframe. This means that real annual savings would be just a fraction of the official savings reported to the Commission.

We’re still not sure exactly how many member states are in favour of this definition of ‘lifetime savings’. But it seems the UK is one of them. This at least is what officials from the UK’s Department of Energy and Climate Change (DECC) told us in a meeting in London on March 21st.  See below for our follow up email to Tom Bastin, Sarah Meagher and James Acord, three of the DECC officials leading the UK’s work on the directive.

Our figures are in terawatt hours. 1000 TWh are equivalent to 85 million tons of oil equivalent (mtoe). See IEA conversion table

“Dear Tom, Sarah, James,

Thanks again for a very interesting meeting on Wednesday. We’re writing to follow up the discussion on the 1.5% target in Article 6 and in particular the lifetime savings model you described.

If our understanding of your lifetime model is correct then we’re seriously concerned that the statistical savings are totally disconnected from the real savings. Your point – if we understood it correctly – is that each year’s target does not have to be met by real savings delivered in that year. Instead, measures would be put in place that would deliver the savings over their whole lifetime.

As the Commission puts it in their non-paper, this means “claiming savings that will, in reality, not materialise for many years to come”.

Let’s try this out with some numbers:

The UK’s final energy consumption (minus transport) is very roughly 1000 TWh / year. In order to meet the 1.5% target the UK would have to achieve 1^st year savings of 15 TWh. According to the method you described in the meeting these 15TWh would be met by installing measures that over their lifetime would deliver 15TWh. Assuming a lifetime of 20 years this means the real 1^st year savings would actually be 1/20 of 15 TWh = 0.75 TWh.

If this is your understanding of the 1.5% target then we have some serious problems. The most obvious is that the benefits that result from energy savings would be lost. Take GHG reductions: savings of 15TWh roughly correspond to 3 million tons of CO2 equivalent. But savings of 0.75 TWh are the equivalent of just 0.15 MT CO2e. A huge difference – especially given the scientific case for large short term GHG reductions.

Please get back to us as soon as possible on this issue! Our position: a 1^st year target of 15 TWh must be met with 15 TWh real on-the-ground savings in that year”.

Does DECC fully realise the implications of what it’s calling for? We’re still waiting for their reply. The point is that if accounting tricks to meet the 1.5% target are disastrous for greenhouse gas emission cuts, they’re equally bad for cost savings and energy imports. Salami tactics indeed.

By Brook Riley and Erica Hope

Solar electricity generated from PV panels and mirrors is due to become one of the leading sources of power generation in the 21st century. It is abundantly available and will become cheaper to produce than fossil or nuclear electricity, due to technological advances in thin-film solar cells and conversion rates of solar irradiation.

EU researchers had recognised this almost 40 years. The EU, Germany and Spain have promoted solar research and encouraged consumer demand by long-duration subsidies up to 40 cents/kWh for home-generated PV electricity sold to utilities.

Thanks to these subsidies, the most expensive after nuclear power, Europe has become the world`s biggest user of PV electricity. Of the total capacity of 67 GW installed world-wide in 2011 more than two thirds are situated in Europe, mostly in Germany, Spain and Italy.

Until the middle of the last decade Europe has also been the leading manufacturer of PV cells and panels, before ceding its initial competitive advantage to China. Taiwan and USA. In 2010, the eight leading of manufacturers of solar modules were Chinese, only one European and one American. In 2011 China dominated 57 per cent of the world market, compared to only one per cent in 2001! During the same period, Germany, the major European manufacturer, barely managed to hold its world market share at a meagre 6-7 per cent!

This dramatic shift has a very simple explanation.

The EU has not been able to formulate an industrial policy for renewable energy.

It has failed to realise that solar and wind are two key technologies for the world`s future power supply that require a strategic guidance and support. Energy and industrial policies have not been synchronised, due to national fragmentation, rivalries and dogmatic approaches. Lacking a strategic long-term vision for solar and wind industries the EU`s future power supply might sooner or later depend on imports of solar panels, wind turbines, rare earths and technology from China.

Contrary to industry claims, the loss of market share of German and US solar panel manufacturers to their Chinese competitors is not due to high Chinese subsidies: the anti-subsidy filing by US producers has not yielded the hoped-for result. On March 20, the US Commerce Department has decided to impose countervailing duties ranging only from 2.9 to 4.7 per cent on imports of Chinese solar panels, compared to a 60 per cent decline of market prices for PV modules between 2008 and 2011. Asian manufacturers, involved in cut-throat competition, have, indeed, undertaken huge efforts in reducing their production costs and making PV-generated electricity more competitive with fossil-generated one.

After 30 years of research and deployment efforts, solar energy is still in an infant stage. The 67 GW capacity installed world-wide cover no more than tiny 0.5 per cent of global electricity demand!

The European solar industry therefore still has a chance of survival, provided it concentrates on high quality and economies of scale. This requires the EU Commission and the European photovoltaic industry to urgently devise appropriate strategies.

The same applies to the European wind power industry which is also in a dire state. After having been the uncontested world leader, it has to share that role with manufacturers in China and elsewhere.

Both industries are of strategic importance for Europe’s future energy supply. Both must remain competitive world leaders. It is up to the industry with the support from the European Commission to make this happen.

 

From: XXXXXXXXXXXXXXXXXXXXXXX (ENER)
Sent: Friday, March 16, 2012 5:47 PM
To: XXXXXXXXXXXXXXXXXXXXXX(ENER)
Subject: Last night – efficiency directive and the Commissioner

Dear XXXXXXXX,

Many thanks for a lovely dinner last night and please tell XXXXXXXX it was delicious as ever. Our place next time!

I hope you didn’t take my remarks about our Commissioner the wrong way. The dinner and the company made me say more than I should have – or say it badly. If so sorry to have been a bore… But in vino veritas; I do stand by what I said about the energy efficiency unit feeling let down by Oettinger.

It started with his opposition to the 30% emissions target in February last year. Why on earth did he splash such a blatant “heavy industry before climate” message across the Guardian? He knows one of the main reasons we need the new efficiency directive is to make 25-30% CO2 cuts possible. Sometimes I wonder what his agenda really is.

Then there was the choice to go for measures instead of binding energy savings targets in the June directive proposal. OK, I know Member States didn’t (don’t) like targets. But – call me naïve – isn’t it our business to stand up for our own analysis? Why bother with impact assessments if the recommendations are dismissed? It’s not just that we didn’t propose targets – it’s no secret the measures are watered down versions of what we’d assessed were needed. We’ve given in to the Council at every turn. Just look at the energy company obligations in Article 6 and how they were gutted by the opt-out.

What kind of leadership is that? We’ve been left with a weak proposal which we knew would get pulled apart even further by the Council (and believe me that’s just what’s happening in the Working Parties). You’ve got to agree it’s bad tactics to open negotiations by asking for less than you hope to get. Like going to a strip poker session wearing underpants, as Turmes said in Parliament…

In 12 months the only person to have really stuck his neck out on this is Philip. I could have hugged him when he told the Council they can’t say no to targets and measures – and that they’d better make up their minds fast. But if the Commissioner had done his job it wouldn’t have been left to him to say this.

Sorry if I’m sounding angry… but better to be frank I think. As a Commission our credibility is undermined if those at the top don’t back up what our analyses show are needed. Negotiations between the Parliament and the Council are starting soon – and we’re supposed to play the ‘honest broker’. I hope we start doing a better job. So far I can’t help feeling we’ve been very convincing on why Europe needs to save energy, but inexcusably weak on policies to deliver the benefits.

Do what you can about this, will you? And see you at the club tomorrow.

XXXXXXXX

Publisher’s Note

The legislative fight on the draft Energy Efficiency Directive (EED) is entering its most critical stage. On February 28 the EU Parliament’s energy committee voted for ambitious amendments to the Commission’s proposal. Negotiations with the Council should begin before the end of the month. Striking a deal will not be easy: the Parliament is supportive while the Council has taken a more negative position. It will fall to the Danish Presidency to broker a deal between the two parties – with the support of the European Commission, whose business is to get what is best for Europe. But judging by its performance so far, can it really be trusted to do this?

Sometimes it would be interesting to know what DG Energy staff really think about the Directive they have put forward. This ‘email’ – not a real one unfortunately but 100% based on meetings and reports over the past year – gives a taste..

Posted by Brook Riley and Erica Hope

With sun shine of > 2500 hours per year, North Africa and the Gulf countries are among the best insulated regions of the planet. They are also unequalled in radiation density (2500-3000 kWh/m2/year). Both factors combined make them ideal locations for generating solar electricity.

Indeed, the 22 Arab countries, occupying one third of global desert areas, possess a solar energy potential of 4.3 million Twh/year, 27.000 times (!) their combined oil reserves and more than enough to cover their own as well as European power needs in the 21st century and well beyond.

But so far they have been lagging far behind other parts of the world in exploiting their rich potential.

Germany with unfavourable radiation for generating solar power, Spain, USA and, more recently, China continue to be the front runners for what will be in the long run the dominant technology for renewable energies.

Presently, the total solar capacity of the MENA region is not even 1 GW, less than 10 per cent of Germany’s newly installed capacity in 2011/12 .

This sombre picture is slowly brightening up. Several major countries, especially those with no or small fossil reserves are set to expand the generation of solar – and wind – energy:

• Algeria and Morocco aim at covering 40 per cent of their power generation from solar and wind by 2030.
• Saudi Arabia is much more modest; it plans to obtain 10 per cent of its power needs from sun and wind by 2020, though it possesses a huge potential for both renewable sources.
• United Arab Republic targets seven per cent of its power demand to come from solar by 2020, half from PV and half from concentrated solar power.

These endeavours will be eased by the prospect of solar electricity becoming fully competitive, in optimal locations, with fossil- generated power towards 2015, according to the CEO of Suntech, one of the leading solar companies based in China.

The overriding rationale behind the “discovery” of renewables, long despised, is two-fold: diversification of supply and, more important, the realisation of the finite nature of oil and gas reserves. Expecting costs of production, domestic consumption and world market prices to rise further, they prefer to keep oil and gas for exports.

The abundant availability of solar power makes the use of nuclear power a hazardous and economically foolish option. No Arab country needs nuclear power. It is more expensive and infinitely more risky than solar power, whether through photovoltaic panels or concentrated solar mirror technology. So far only the UAE have formulated concrete plans for the construction of four nuclear plants with a total capacity of 5.6 GW. No other country should feel tempted to follow what is likely to prove a bad example.

The geographic proximity with Europe pleads for close cooperation between the two shores of the Mediterranean, both for investments and grid connection.

This goes more for the Mediterranean than the Gulf region, which disposes of ample of cash and does not depend on European investors. But European companies can play a role in project design and technical consultancy. This happens, but failing to bundle its forces, Europe finds it increasingly hard to compete with Korean, Japanese or Chinese companies.

The closest cooperation is likely to develop between the Maghreb and Europe. Here a considerable number of projects are in the planning or construction stage with involvement of European counterparts, including the EIB; and here the prospects for transporting large quantities of solar electricity to Europe are realistic in the medium term.

The Desertec Project involving major European and Maghreb companies may become a focal point . Until 2040 some € 400 billion are to be invested in solar power plants, both PV and concentrated solar, and trans-national transmission lines. Europe might import up to 15 per cent of its electricity needs by the middle of the century from solar power plants in North Africa, which will be linked to a huge smart grid reaching until Scandinavia and form an indispensable complement to off-shore wind power.

These are revolutionary developments. They require long-term comprehensive spatial, technical and financial planning involving interested governments, utilities, investors and potential supplier companies.They should figure among the top priorities of the future EU-MED agenda. Both sides need a 2050 road-map for their cooperation in electricity generation and grid connection.

 

Our life style impacts the environment!

Humanity’s environmental footprint has been deepening rapidly in the past decades placing our generation, and the ones to come, in great environmental risks and ‘ecological debts’ requiring immediate actions.

The uncontrollable exploitation of natural resources in a continuous industrial, technological and structural development that has been proved ‘unsustainable’, have placed great deteriorating pressure to the environment – leading to the depletion of natural resources and deterioration of climatic equilibrium.

The global energy consumption has been increasing dramatically in the past years; the majority of energy requirements of modern civilisations, mainly for the production of electricity and transportation, are primarily sourced from fossil fuels, such as oil and gas.  This has lead not just to the depletion of natural resources but also to the erosion of the ecosystem; consumption of fossils increases concentrations of harmful gasses, such as SO2, CH4 and CO2 into the atmosphere which lead to global warming through green-house effect.

In our era, we are eventually being bombarded with tons of environmental solutions aiming to meet with, long-ignored, contemporary environmental challenges. So called ‘green’ solutions include shifting towards renewable energy resources through renewable technologies, increasing energy efficiency and adopting alternative practices that do not harm the environment – ‘that much’!

In order to facilitate this shift, nations worldwide, and primarily EU member states, have cooperated for the formulation of a new economical and political system that will transform future global systems towards environmental, economical and social sustainability. Examples of such initiatives are the Kyoto agreement and other legislative measures that EU member states are implementing either to penalise – monetarily – environmental misconducts, such as CO2 emissions, or to provide economical incentives for investments in green solutions – some examples are subsidies on electricity produced from renewable energy sources, capital subsidies for construction of green buildings, funding for environmental technology research, etc.

Apart from devising measures and solutions aiming to place the environmentally preferable practice in a position to be also ‘economically preferable’, people need to develop a new sense – intuitive environmental awareness. In this respect, we start with a simple, memorable environmental equation with two variables and one result:

By reducing our energy demands we reduce consumption of fossil fuels thus reduce our harm to the environment. In addition, by using renewable energy sources such as solar, wind, biomass, geothermal and hydro energy in place of fossil fuels (non-renewable) we reduce further our consumption of fossil fuels (harmful emissions), thus further reduce our harm to the environment.

Further analysis of these variables shows that reducing our energy demands can be achieved by adopting energy-saving practices such as, promoting green buildings, increasing energy performance of buildings and appliances, shifting towards a more efficient electricity network through distributed power supply and minimizing energy-waste.

Similarly, reduction of fossil fuel consumption entails increasing penetration of renewable energy sources within the global energy mix; natural resources can substitute fossil fuels in the production of electricity whereas ‘next generation technologies’, such as fuel cells and hydrogen, can be the environmental solution for both utility power supply and transportation.

The EU has already set specific targets in all areas of energy conduct based on a broader energy vision and policy – an important milestone is 2020 by which time EU member states aim to fully commercialize renewable energy technologies (including next generation techs) and to increase penetration of renewables to a share of 20% of total energy production. By 2020 member states additionally aim to increase energy efficiency in all sectors and to achieve a reduction of the primary energy use by 20%. In an effort to accomplish the EU energy objectives, member states are adopting measures, policies and directives to involve and influence all levels and stakeholders, private and public sector, in meeting with these objectives. In their effort to accomplish EU energy targets, including RES penetration, EU member states are adopting and incentives to involve the private sector in meeting with these objectives.

Through this blog I wish to discuss on EU renewable energy practices such as acknowledging targets and the degree of conformance, identifying RES technologies, assessing the appropriateness of different RES technologies, influence of subsidies and tariff levels amongst EU member states, etc.

Constructive, critical comments are always welcome!

The announcement by Prime Minister Wen Jiabao to the Popular Congress that Chinese economic growth is likely to fall from 9.2 last year to only 7.5 per cent in 2012 has immediately led to a sharp decline of the shares of the world`s mining companies that anticipate lower Chinese production of steel, copper, aluminium etc.

China has become the world`s biggest C02 emitter country and is likely to remain so in the future whatever evolution of its GDP. But lower economic growth will slow down the rise of C02 emissions and make it easier for China to become more “climate-friendly”, one of the declared objectives of Chinese economic policy.

Of course, Chinese GDP forecasts have regularly proved too prudent. But the trend towards slower growth seems irreversible. The era of two-digit growth rates belongs to the past. Economic growth should progressively descend to no more than 6 per cent annually which – for a country with an almost stable population – corresponds to an equivalent rise of living standards.

At an assumed 6 per cent annual GDP increase China should be able to contain the annual increase of emissions below 3 per cent annually if it pursued a vigorous promotion of energy efficiency and renewable energies. But this will require a resolute effort by the government and business.

At the December 2011 Climate Conference in Durban China has agreed to negotiate an international climate compact until 2015 to enter into force after 2020. Lower economic growth, higher energy efficiency and wider use of renewable and nuclear energies should enable China to take on board more ambitious commitments for green house gas emissions and achieve high living standards with much lower per capita emissions than either USA or Europe.

That is the vital challenge for China and Humanity for the 21st century.

 

Since 2002 the EU has initiated two sets of policies to reduce green house gas emissions from cars:

• encourage the use of biofuels from sun flower seeds, rape seeds, soy beans, wheat, corn and palm oil and obtain a share of 5.75 per cent of total fuel consumption in 2010 and 10 per cent in 2020.
• fix a technical standard of 130 g C02 emission per km for the average newly registered car in 2012.

Both measures were only moderately successful:

• The bio-fuels employed did not really reduce emissions because of additional C02 emissions occurring during their production and processing.
• The fast rise of individual traffic more than neutralised the positive impact of emission standards;

The EU should therefore try to do better in the future.

It should only admit biofuels that reduce C02 emissions by at least 50 per cent, taking into consideration all negative by-effects, from the use of chemical fertiliser to deforestation.

Second generation biofuels like wood, grasses, non-edible parts of plants achieve such results and should therefore be the basis for the future.

Europe has a good chance of becoming one of the leaders in processing cellulosic bio-ethanol. The world` s biggest plant is due to start production later this year in northern Italy. The EU should encourage the development of this innovative industry.

By supporting sustainable ligno-cellulosic bio-ethanol the EU would also render a service to its aircraft industry that calls for sustainable kerosene additives. The future of low-carbon air traffic will depend on higher fuel efficiency of planes and less polluting fuels.

In practical terms, the EU should take two strategic decisions:

• Phase out the use of first generation bio-diesel until 2020.

It should drop the 10 per cent non-mandatory target for the share of biofuels in total diesel/gasoline consumption for 2020 as meaningless, end support mechanisms like the € 45/ha premium for sun-flower and rape seed production and offer incentives for the production of sustainable ligno-cellulosic biofuels.

• Fix much more ambitious car C02 emission standards.

The global car industry has made great strides in fuel efficiency during the last years. But it is far from having reached the limits of what is technically possible.

The EU should therefore have the courage to make the average car twice as fuel-efficient as at present. A fuel-efficiency standard of 70g C02 per km for the average newly produced car should be feasible until 2020.

By fixing such an ambitious standard the EU will oblige both the domestic and foreign car manufacturers to focus on fuel efficiency, which will be crucial for future competitiveness.

These measures are no panacea for converting automobile traffic into a green paradise. In order to achieve substantial reductions of C02 emissions from the transport sector the EU will have to adopt a broad programme of actions. Making public commuter transport and rail transport for goods more attractive must become additional priorities beyond minimising emissions from cars and trucks by stricter fuel efficiency standards. Considering the share of the transport sector in the aggregate C02 balance the EU should put more focus on reducing emissions from transport.

By Richard Dick – President of Orgalime, the European engineering industries association

Can we please stop considering industry as a ‘dirty’ word?  For too long now, industry (and in particular the European engineering industry) has not been given credit where credit’s due.  Orgalime, the European engineering industries association indirectly represents (through our national associations) some 130 000 companies – 95% of which are small and medium sized enterprises (SMEs) that employ over 10 million European citizens; those citizens are people like you and me – working to provide a stable home for our families, working to create a better environment for our planet.  And the jobs they are in are providing the technological solutions to the societal demands that our larger and aging population are crying out for.  The European Commission’s policy ‘labelling’ reads like something from a school report – ‘good’, ‘better’ and now ‘smart’.  Now Europe is into forging smart cities, smart grids, smart meters – the list is endless.  And the greater emphasis on efficiency of resources and energy consumption should not come as a surprise to a world where ‘consumerism’ has almost become to be considered an illness.

Engineers have arguably been smart for centuries, so why is it taking politicians so long to catch up?   Will Europe’s lead in greening its economy mean that the technologies to do so will be developed and produced here or will we just import them?  Let us first remind ourselves of our roots – after all, the industrial revolution did have its beginnings on European soil.  This birthplace, once described as “the most extraordinary district in the world”, is still a remarkable, and beautiful, place to visit today.  At the Ironbridge Gorge, near Telford in the United Kingdom, a huge amount of early industry still survives as furnaces, factories, workshops, canals and the settlements of Coalbrookdale, Ironbridge, Jackfield and Coalport live on.

But this was at a time when coal supplies appeared to be endless and certainly the impact of ‘industry’ on the world we live in hadn’t even been thought of, let alone understood.  It can be argued that the industrial revolution has never ceased – over the 3 centuries that have passed since Abraham Darby founded the Coalbrookdale iron foundry in 1709, is it not that the evolution of industry has become the cornerstone of economic wealth and growth.  Nevertheless, it seems that history seems to have taken all of this for granted.  Those early engineers didn’t have government grants and subsidies to achieve their pioneering work – it was pure curiosity and persistence that prevailed, with the realisation that somehow their efforts would ‘make a difference’.

European industry can and should aspire to maintaining a leading role in the world economy.  However, in order to do so, it must be able to compete on an equal footing with other regions of the world.  This is becoming all the more important at a time when we see a surge of growth shifting rapidly to other regions, such as Asia, while Europe still struggles as it tries to emerge from the economic crisis.  Our industry is doing well in export markets.  This is heartening because it means we are successfully competing on the international scene, and we need this to continue.  However, for our producers of capital goods, it is equally important for the long term that our customers invest here in Europe.  This will be a sign that the industrial policy agenda launched by the European Commission really is bearing fruit and helping to lay the foundations for better longer term structural growth.  Hence our motto: ‘Manufacturing Matters’.  Turning Europe once again into one of the more dynamic economic zones is a goal worth fighting for and it is a goal which we must achieve.

In a global marketplace when the ‘sun never sets’, Europe has to turn its fortunes around.  Why have we ended up in such a situation?  Complacency springs to mind – when things are going well, politicians have the habit of turning on the benefits tap while swishing the knife in areas identified where short term vote winning decisions can be made.  These inevitably have disastrous long-term consequences and are difficult to fix.  Europe has dangerously tussled with the fact that we are the best in everything, when in reality, the rest of the world has caught us up (and in some cases, overtaken us), creating ‘unwelcome’ competition in the manufacturing sector.  But there is still a glimmer of hope – Europe is good at innovating.  But that costs money and when the financial climate is as delicate as it has been, investing in research & development to produce the innovation that Europe so desperately needs is sometimes less attractive because Europe itself, as the mountains of regulation many of which are unfriendly towards industry, is for many becoming an increasingly unattractive place to invest in. Why is this so?

First manufacturing naturally sites itself where there is a market:  opportunities in Europe must outweigh the constraints created by Europe for our industries.  We believe that political decision makers have a crucial role to play in designing measures that help to stimulate market uptake, for example of energy efficient and greener technologies, thereby effectively creating success stories here in Europe which will underpin our export markets.  This is why we are convinced that the institutions’ drive to get national governments to support investment in energy efficiency is a step in the right direction.  The message is simple: innovate, use and produce in Europe. But are governments listening? No on the contrary they are resisting moves in this direction.

And what about the other rules? With the development of the internal market – a major EU success story – came a considerable body of European technical legislation on products.  A few core directives, such as the Low Voltage, Machinery and Electromagnetic Compatibility Directives, and occupational safety directives have both regulated the health and safety aspects of engineering products and their free circulation in an ever larger internal home market.  In recent years, however, the EU has enacted a substantial body of legislation in areas such as the environment, employment and social affairs, consumer legislation, etc… while at the same time continuing to develop or review internal market legislation.  This has led to a highly complex and continuously changing regulatory framework.  If such regulatory measures, taken individually, may often seem justified, the resulting body of regulation has become too unwieldy for manufacturers and in particular the smaller companies to manage.  To make matters worse, national, regional and even local authorities add further requirements.  This is affecting the competitiveness of Europe as a manufacturing base.  What needs to be done to recreate the dynamism which is so essential?

In particular, the European electrical engineering industry that mercifully has its home base in Europe, makes the technologies that are needed to create a living environment more conducive to the quality of life of a maturing society faced with many challenges.  It is these industries that provide the technologies needed to achieve the political goals of becoming more energy and resource-efficient and set up the best energy infrastructure possible.  It is these industries that bring together all the energy efficiency technologies around a ‘smart home’ or a ‘smart building (e.g. by combining intelligent household and consumer electronics with the building infrastructure and energy system). It is these industries that create the road and transportation technologies to generate an intelligent traffic and mobility (e.g. by combining the best features of the different transportation modes such as road, air and train traffic with local urban public transportation and electro mobility concepts).  Thinking in terms of, and believing in, systems and network technologies with the aim of finding the best technical solution to a particular demand or societal challenge is what Orgalime and its members want.

In 2008, after two years of collaboration between the European Commission led by Commission Vice President Günther Verheugen and Europe’s electrical engineering industry led by Edward Krubasik, the then Orgalime President, the Electra report “Twenty solutions for growth and investment to 2020 and beyond” was issued.

Now, in 2012 a stocktaking exercise has been conducted in the form of the Electra 2, which will be launched at the Hanover Trade Fair in April 2012.  The industry represented through Electra aims to:

• Briefly analyse the results of the first Electra report
• Outline the changes that have arisen following the 2008-2009 economic crash as well as the impact of this on Europe’s electrical and electronics industry
• Re-examine the challenges that Europe faces today and present proposals to support European policies in its energy- and resource-efficient growth-and jobs-agenda and outline the steps that need to be taken to make Europe a ‘smart world’.

While innovation will be at the core of the success of our companies, one of the essential elements to ensure that this translates into jobs and growth in the EU will still remain the total cost of production. For this a number of issues remain of the utmost importance:

Think manufacturing technologies…

First and foremost Europe must continue to focus on manufacturing technologies – an area where we lead the world and where we must continue to excel if we are to maintain long term manufacturing competitiveness. This requires that our industry operates in a global framework which is supportive.

Think supply chain…

As a result of the development of regulation, we are increasingly faced with what the institutions euphemistically term as “production leakage”, that is part of our industrial infrastructure is either moving out of the EU or developing new capacity in less regulated areas of the globe or areas with better market prospects: where part of our industry’s own supply chain or customer base migrates to other areas of the world, we are increasingly finding that our own competitiveness is being undermined if our companies do not develop capacity in those areas.  Therefore, when carrying out impact assessments on new policy and regulatory initiatives, a much closer analysis of the supply chain effects should be undertaken.  For example in Europe we are world leaders in the area of production and automobile automation systems.  Our manufacturing base for these productions is largely in the EU: however, if our client base migrates to other areas of the world, we will inevitably have to relocate our R&D and our production close to the sites of our clients.

On the supply side before the downturn in the economy, our industry was becoming increasingly concerned about raw materials availability at competitive conditions: while non-ferrous metals tend to be quoted on exchanges, this is less the case in the area of steel where we have seen a number of tendencies:

• The steel mills which are increasingly large global companies are moving further and further downstream into the territory until now occupied by metalworking SMEs.
• Steel companies are also tending to put pressure on the institutions to limit competition from imported steel, essentially through the use of the anti-dumping instrument.  Two recent cases which were strongly resisted by our industry due to the gap between EU and foreign steel prices (hot-dip galvanised and stainless steel sheet) were withdrawn, but the steel giants are still promoting protectionist policies which will inevitably undermine the capacity of engineering SMEs to produce in the EU many products in the face of competition from imports produced in countries where steel prices are lower.

Think energy costs…

Just as important for our industry is the availability of energy at conditions which are competitive compared to those found in other major manufacturing countries.  Electrical energy in particular, even with increased energy efficiency, is likely to play a growing role in our energy mix and will serve as the basis for the development of areas of technology, such as the electric car.  For these technologies to develop in optimal conditions, it is important to maintain competitive energy prices at a time when the electrical utilities will also be required to invest to improve their efficiency and carbon footprint. Therefore a number of issues are essential in this context, such as:

• Providing a stable, predictable and appropriate legislative framework that mobilises market forces and competition to drive innovation.
• Setting overall energy efficiency targets for each member state, independent of the given energy mix and enforcing the development of a binding roadmap in term of power plants, power transmission and distribution (new and retrofits) based on an exhaustive inventory of the current environment and a clear target for each country.
• Proposing proper incentives for utilities to invest in efficient technologies.
• Encourage the adaptation of the architecture of the Transport & Distribution grids, removing barriers from regional planning and simplify permitting processes.

Think staff…

The engineering industry is a vast industry employing over ten million workers in Europe.  In an industry which by its nature is already cyclical and which sees its production cycles changing very fast, it is essential that regulators recognise that, in addition to full-time and permanent work, there is an increasing demand for a diversity of working arrangements, including part-time, fixed-term and temporary agency work, from both employers and employees.

Flexible labour markets allowing the speedy and efficient deployment of labour are therefore vital if European companies are to respond efficiently to the increasing pressures of global competition.  Linked to the need for flexible labour markets are the demographic problems that Europe – particularly the 15 “old” member states – will face in the years ahead.  Many European countries already suffer from skills and labour shortfalls which will be exacerbated, as Europe’s population grows older.  We therefore support the free movement of workers in the enlarged European Union without any restrictions and also welcome the “blue card” as a temporary measure to alleviate pressure in the demand for skilled personnel.

Companies and their employees will also need to become more open to the idea of working later in life. Governments should re-consider existing provisions which encourage early exits from the labour market and replace them by ones that promote active ageing policies including, for example, flexible retirement arrangements.

Social policies are therefore a vital part of the framework in which companies operate.  Our industry is therefore convinced that, in the field of social policy, more adaptability will contribute to improved competitiveness.  In our view, all existing and forthcoming social policy regulations at European and national level should always be checked against the principle of subsidiarity.

So to conclude, I am a strong believer in the future of manufacturing in Europe: we have the capacity to innovate and when the conditions are right, our companies will invest here; I know this from my personal experience where my own company has won back work which our customers had placed in India.  So there is no inevitability that Europe should become a manufacturing desert.  On the contrary, so long as our politicians and regulators understand that we are the key to getting Europe out of its austerity mood; we are the key to providing our young with a bright future here in our countries.

On friday the 24th of February the European Commission invite stakeholders for consultation in preparation of the 2012 Renewable Energy Strategy.

As recently pointed out in the Commission’s Energy Roadmap 2050, renewable energy sources will play a major part in Europe’s long-term decarbonisation efforts. While the Renewable Energy Directive 2009/28/EC sets a clear framework for further growth in renewable energy until 2020, the debate about how the policy should develop beyond the 2020 horizon needs to start now.

This is why the Commission is preparing a strategy document that will look at the policy framework for renewable energy in a post-2020 perspective, to be published in the second quarter of this year.

The legislative framework as regards renewable energy is laid down in the Renewable Energy Directive which sets an obligatory target of 20% renewable energy in final energy consumption as well as a 10% target in transport for 2020. Given the long-term perspective of investors it is necessary already now to look beyond that year. Against the background of the EU’s ambition to move towards a reduction of 80-95% of GHG emissions in a 2050 perspective, it is clear that a further strong growth in renewables will be needed beyond the 2020 targets.

This public consultation has the aim of soliciting the view of interested parties to assess in how far the orientations of the current policy framework remain valid in the medium term - i.e. until 2030. Interested parties are requested to consider the specific questions addressed in the consultation document. Read more in the EU document.

As far as I can see the traditional lobby organisations from the industry complain about the cost, binding targets and neutrality issues.

Green groups, together with Greenpeace, Friends of the Earth, power association Europex and sustainable energy group Inforse support a post-2020 binding renewables target.

Regarding the ongoing debate on the European financial measurement tools it would be logic to look at national budgets and their role tosupport EU Climate Change targets and the tools for renewable energy. Read also Greeks, be aware of the Trojan horse!

 

 

On February 10th 2012, Total, one of the three giant European oil and gas companies, has announced that it will scrap its nuclear ambitions and focus instead on gas and solar for complementing its huge and flourishing oil business.

This is good news for several reasons.

• It will make Total`s business more sustainable by putting it on three legs and investing parts of its oil profits in sectors with a better long-term future. It will, however, take many years before the solar business will make a substantial contribution to Total`s profits. By the same token it will make the company more attractive to “green” clients, something BP had tried without delivering serious results.
• It will strengthen Europe’s fledgling solar industry.

Thanks to the $ 1.4 billion acquisition of the US Sun Power Corporation last April Total has become the Number three in the global solar PV business. Hopefully, it will further consolidate its position by buying some of the small German solar companies that have failed to become global players. Europe desperately needs competitive solar companies to play a global role.

• The decision by Total to enter the solar market should give a boost to the European solar industry. Its determination to become profitable in two to three years through significant cost cutting efforts will inspire more confidence.

The European Commission should applaud the overdue re-reinforcement of the European solar industry and encourage more mergers/acquisitions.

• Hopefully, Total will also enter thermal solar power generation and make it more cost-effective through economies of scales. To that end, it should join the Desertec Industrial Initiative and help making thermal solar electricity more attractive for North Africa.

The forthcoming Presidential and Congressional elections in the USA will also be of crucial importance for the future of our planet.

Traditionally, Republican Administrations and Congressional majorities have cared more about oil and coal interests than about energy efficiency and renewable energies.

President Obama`s ambitious climate legislation programme has been foiled by a Republican majority in frustrating Congressional battles. Republic members of the Congress even tried to blunt the Administration` s major tool, i.e. the authority of the Environmental Protection Agency (EPA) to set fuel efficiency standards, in particular for cars, light transport vehicles and trucks. The November 2011 proposal for the strictest ever fuel efficiency standards to be progressively implemented until 2025 marks Obama`s major effort in the fight against C02 emissions.

But he has also been a staunch supporter of clean-energy programmes. Both wind and solar investments have mushroomed during the last four years, in particular thanks to federal tax-break programmes. Wind energy now accounts for one third of new electricity generation. That compares impressively with EU achievements, but still falling short of German or Danish records.

Thus, even though the USA lacks sophisticated incentives comparable to the EU cap and trade system, under which the 12 000 biggest energy users are bound to reduce their C02 emissions by two per cent annually, the country has become “greener” under the Obama Administration, through massive coal substitution by shale gas, higher energy efficiency and more renewable power generation.

Such progress would be at risk under a Republican Administration and Congressional majorities.

President Obama calls for an extension of tax credits for renewable power generation as part of a broad energy programme, until wind and solar electricity generation will become competitive with coal- and gas-produced power towards the end of the decade. If any President at all, Obama might be able to convince Congress of the need to embark on forward-looking initiatives to make the US energy system more sustainable and join a coalition of the main C02 emitter countries for a comprehensive global climate pact until 2015.

These should be enough reasons for voting Obama and Democratic next November.

Connie Hedegaard said: “EU Energy Efficiency Directive includes a commitment to retrofit a certain number of public buildings each year, improving insulation and stopping leaks”.”We have proposed a percentage of 3 percent a year, and that’s out of an employment perspective as well,”

“One of the few things that can create jobs very, very fast in Europe is if you actually doing something with retrofitting pipes, retrofitting energy systems, retrofitting houses – that creates jobs very, very quickly after you have adopted these kind of policies. There are not so many other issues that can do that.”

With Europe’s economy in the doldrums because of the euro zone debt crisis and unemployment at 9.8 percent in November, politicians are desperate for ways of providing growth but unwilling or unable to pay for a stimulus package.

Better insulation for Europe’s buildings would help a construction sector.

It’s estimated that that energy efficiency alone could generate 500,000 jobs in the years up to 2020. But EU also has other initiatives in the climate field where all in all there is the potential of creating 2 million new jobs up to 2020, if we get it right.

Cutting energy use is also an important policy aim because of the twin risks of environmental damage and reliance on expensive energy imports. The EU has put an embargo on oil imports from Iran from July, further squeezing its supplies.

The retrofitting work would be supported by the EU budget and would help European governments to save money in the future by cutting wasteful energy use, as well as boosting employment.

During the trilogue in the next March, the EU Istitutions would have to back the proposal, which the European Commission launched last autumn.

The current Danish EU presidency fixed the Energy Efficiency directive like the top legislative priority and it is determined to have the measure in place by the time its six month term ends in June.